Sinopec Group Said to Explore Bid for Maurel & Prom

China Petrochemical Corp., the
nation’s biggest refiner, is considering an acquisition of
French oil explorer Etablissements Maurel (MAU) & Prom, three people
with knowledge of the matter said.

China Petrochemical, also known as Sinopec Group, has held
informal discussions with Maurel in the past year though hurdles
to a deal remain, said two of the people, who asked not to be
identified as the deliberations are private. A deal could value
Maurel at more than $2 billion, the people said. Maurel shares
rose the most in four months in Paris today.

Chinese refiners are seeking assets overseas as domestic
earnings are depressed by state-controlled prices for processed
fuels. Buying Maurel would allow Sinopec Group to boost oil
production in African countries including Gabon, while avoiding
the regulatory scrutiny that’s held up Chinese deals in the U.S.
and Canada.

“It’s in the right kind of price range of a couple of
billion dollars, not too small with rich international assets,
while not too big that it attracts a lot of attention,” said
Neil Beveridge, a Hong Kong-based energy analyst at Sanford C.
Bernstein & Co. “Its oil and gas resources in Africa look
attractive to Sinopec Group.”

Possible Partnership

Maurel Chief Executive Officer Jean-Francois Henin said in
August the explorer isn’t big enough to remain independent and
partnering with another company or being acquired would allow
development of oil and natural-gas projects.

Two phone calls to Lv Dapeng, Sinopec’s Beijing-based
spokesman, went unanswered. An official at Paris-based Maurel
declined to comment.

At 1.3 billion euros ($1.7 billion) before today, Maurel’s
market value is less than a 50th of that of Sinopec Group’s Hong
Kong-listed unit. Maurel climbed 8.3 percent to 11.64 euros at
the close of trading in Paris. Sinopec rose 2.1 percent in Hong
Kong.

Maurel shares had fallen 9 percent in the past year before
today, cutting its market value by more than 500 million euros.
The explorer had been in acquisition talks with India Oil Corp.
“on and off” for years, and failed to attract a reasonable
offer for the entire company, said Henin, who owns 24 percent of
Maurel.

Chinese Acquisitions

China’s state oil companies have spent more than $100
billion acquiring assets over the past decade to supply the
world’s second-largest economy, which is also the biggest energy
importer, according to data compiled by Bloomberg. Sinopec in
January said it plans to produce 50 million metric tons of crude
a year overseas by 2015, up from 22.9 million tons last year.

The company agreed in July to spend $1.5 billion for a 49
percent stake in Talisman Energy Inc. (TLM)’s U.K. unit, gaining
access to oil and gas fields in the North Sea. The 2009
acquisition of Addax Petroleum Corp. for $8.8 billion brought
Sinopec operations in Gabon.

Maurel has been in Gabon since 2004, and the country has
been a “major growth engine,” according to its website. The
company also has assets or operations in Congo, Tanzania and
Mozambique.

Cnooc Ltd. (883), China’s biggest offshore oil and gas producer
with no refining operations, has proposed the nation’s biggest
overseas acquisition, offering $15.1 billion for Canada’s Nexen
Inc. (NXY) Canadian and U.S. regulators are reviewing the takeover,
which prime minister Stephen Harper has said raises “difficult
policy questions” as members of his ruling Conservative Party
criticize asset sales to state-owned entities.